Bitcoin Miner CleanSpark Continues to Build – Bitcoin Magazine
It’s no secret that the bitcoin bear market is bad right now. By some calculations, it is one of the worst downturns in Bitcoin’s young history. And few sectors of the Bitcoin economy are as badly affected by current market conditions as miners. But bear markets are precisely when mining winners are separated from losers: The agile and smart teams build and survive while the handed and unprepared teams fall victim to an unfavorable environment.
One company that has continued to grow, acquire and build through the bear market is CleanSpark, a publicly traded bitcoin mining company based in Nevada. This article highlights some of the moves this team has made in recent months, contextualized with some of the brutal state of the mining market, making CleanSpark’s planning and execution all the more impressive and remarkable.
Before proceeding, it is important to note that this article is for educational purposes only. The author has compiled this information and analysis to share as market commentary, not any form of advice. The author also owns no shares in CleanSpark and has no other form of personal financial investment in the company.
Bitcoin Mining Bear Market
Bitcoin price is down about 70% from record highs. Hash price – the dollar value of each unit of hash rate – is rapidly approaching all-time lows. Almost every week there is a new headline about lawsuits, bankruptcies and more bankruptcies in mining. Miners are struggling to stay operational, let alone surpass bitcoin. Almost regardless of the data anyone is looking at, the current bear market is messy and very unfunny.
Despite all this, the CleanSpark team continues to grow, buy and build as the next section explains. Priced in bitcoin, CleanSpark shares are still slightly above where they started the year, according to data from TradingView, despite consistent broader market turmoil – not bad for a bear market.
CleanSparks Bear Market Moves
Many mining companies act as “press release heroes” by announcing and planning to grow, but often fail to execute the plan or at all. However, since its initial foray into the mining sector in December 2020, CleanSpark has since grown to 100 employees and 3 exahashes (EH) of online hash rate, with the hash rate tripling in the past year alone.
CleanSpark has also been on a sustained shopping spree for mining hardware even as market conditions worsened – or perhaps because of it. The company bought 4,500 Antminer S19 last October and 2,597 more the following month. In June, it bought purchase contracts for 1,800 Antminer S19 XPs. In July, the company acquired 1,060 Whatsminer M30S. In August, it bought 3,400 more Antminer S19s, followed by another 10,000 Antminer S19j Pros in September.
CleanSpark has also closed new deals, partnerships and acquisitions almost every month this year, including $35 million in new funding (April), a partnership with TMGcore (June), a co-location deal with Coinmint (July), an 86 megawatt (MW) acquisition of mining facility in Georgia (August), and the purchase of a turnkey mining facility from Mawson (September).
And amid all this growth, the company’s solid financials separate it from having one of the lowest debt in relation to equity throughout the public mining sector. Jaran Mellerud, mining analyst at Arcane Research, so of the company: “CleanSpark’s combination of quality and low valuation makes it one of the most interesting bitcoin mining stocks going forward.”
A brief history of CleanSpark
CleanSpark represents a unique type of mining company unlike most other teams in this sector of the bitcoin market, namely an energy company that transitioned into a mining company. Founded in 1987 as a software and energy company, CleanSpark only started looking at the mining industry in the last couple of years. According to Matthew Schultz, CleanSpark’s executive chairman, the company conducted its due diligence on the mining sector throughout 2020 and saw the series of high-profile bitcoin investments from Square, Tesla and MicroStrategy as “further validation” of the industry’s legitimacy. And in early August, it completed its transition from energy to mining by selling its remaining energy assets to “focus entirely on bitcoin mining.”
This transition gives CleanSpark a unique perspective on the market and something of an advantage for other mining companies merging or partnering with the energy industry. For example, CleanSpark is well aware of the obstacles facing partnerships and negotiations between the two industries, as CEO Zach Bradford said on a mining panel during the Bitcoin 2022 conference in Miami.
“Nobody knows how to price that much power for that consistent load,” Bradford said, referring to hurdles miners face when structuring deals with power companies.
The end of the bear market
When the bear market will end is anyone’s guess. Miners and everyone else in the bitcoin market could be in for an even longer, more painful period ahead. But mining companies are already separating during the market downturn in readiness and taking advantage of the opportunities in a depressed market. Bull markets are times of celebration for all the effort put into growth during bear markets. Winners are truly made during bear markets, and this is no truer for any industry than bitcoin mining.
Based on the road so far, it looks like CleanSpark has set itself up to be a winner.
This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
